Inertia Marketing vs Loyalty Marketing

April 17, 2008

Once a customer is acquired, subscription businesses make a choice between inertia marketing and loyalty marketing.

Inertia marketers make it easy to forget you even have the product. They don’t remind you that you have the high-end cable package; their billing is designed to avoid calling attention to that fact. They reach out when they think they can upsell you, but beyond that they’re silent as much as possible. If you talk about not messaging to your customers because you don’t want to ‘wake the dead’, if your strategies are designed to communicate only when necessary…you’re an inertia marketer. Inertia marketing is driven by fear that you are not worthy. If customers thought about their subscription, they’d cancel.

Loyalty marketers remind you that you’ve purchased their product. They remind you of the value. They communicate to you that they’re grateful for your choice, and they find ways to pass on extra value in their marketing communications. Those extra-value tips also drive usage of the product, making the value clear. Loyalty marketing is driven by confidence and hope. If you think about the subscription, you’ll feel good about the value and tell others about it.

When everything’s stable retention rates can be about the same with both strategies. There’s extra goodness from loyalty marketing, but it doesn’t show up in retention – it’s in new customer acquisition driven by word of mouth.

For any given customer the difference becomes apparent in times of stress. The Netflix account that you never use, the paper that you rarely read…gone. The insurance guy (thank you, David Hearn) who always delivers extra value by making things easy for you stays, even though Geico would be cheaper. That’s only one household, though…when times are stable it doesn’t make a difference and marketers rely on inertia because it’s cheaper.

In an economic downturn, every customer is under economic stress. That’s when inertia marketers ask “How can we promote loyalty?” Without a wayback machine they may be out of luck.